The power of digital transformation is so strong that it can change an entire industry.
Companies that change the way an industry does business on the foundation of digital technologies are called digital disruptors. Netflix, Spotify, Airbnb, Uber and Alibaba are digital disruptors.
Digital transformation refers to how companies leverage digital technologies to change a business model, provide new revenue streams and create value-producing opportunities. Gartner refers to it as the process of moving to a digital business.
When companies embrace digitalization
Digital disruptor’s aside, for most companies things don’t change overnight. Traditional manufacturing will obviously remain within the foreseeable future. New technology such as additive manufacturing (3D printing) will not outperform mass manufacturing in the short-term. On the other hand, things will change across the board for the manufacturing industry and traditional companies must embrace digitalization.
A couple of examples of how emerging digital technologies have already begun generating customer value are:
- General Electric’s jet engines combine cloud-based services, analytics and on-line sensors to report usage and status and help predict potential failures. The result is improved uptime and lower cost of ownership.
- Additive manufacturing (3D printers) for prototyping help shorten the iteration cycles in the design process and help to turn innovation into value. 3D printing is also quickly gaining ground in the commercial manufacturing of customized products in low volumes.
- Smart machines integrated with forklifts, storage shelves and production equipment. These machines are able to take autonomous decisions and communicate with each other to drive material replenishment, trigger manufacturing and much more.
The technologies that are enabling digital transformation
Enabled by digital technologies, the transformation of the manufacturing industry is called Industry 4.0. From a high-level, Industry 4.0 represents the vision of the interconnected factory where all equipment is online, and to some extent, is also intelligent and capable of making its own decisions.
The first and most influential enabler is the Internet of Things. The physical world is moving online as objects, devices and machines acquire increased digital intelligence that bridges the gap between real and virtual worlds.
IoT allows for the collection of vast amounts of data from things that are equipped with on-line sensors and devices. These sensors are able to report information about temperature, humidity, position, start, stop, failure causes and much more. The information can be used for two general purposes:
- Data can be analyzed to find patterns and trends that were previously impossible to discover. Important supporting technologies are cloud computing, which is able to capture and process information in a geographically distributed environment, and technologies for big data analytics.
- The information can be operationalized. This means that information can be turned into action. This action can be triggered as a direct result of a signal received by an IoT-enabled sensor, or indirectly as the result of a trend found using data mining or machine learning.
An example of direct operationalization would be to trigger action because a sensor reports a temperature above a certain threshold. An example of indirect operationalization would be an action initiated because the temperature has increased for 3 hours. An action of this scenario can be as simple as an information alert that’s sent to someone, or the creation of a work order that is automatically scheduled and dispatched to a field technician with the right competencies nearby.
Digital technologies are the next major driver for growth. Companies now have a window opportunity to where those which are agile and daring enough to embrace and adopt these concepts, can gain advantages against the late majority.
Developing your strategy for digital transformation
As a traditional company, you need to think about which digital technologies can bring opportunities to your company, customers and employees. A digital strategy is necessary to avoid disruption and potentially become a disruptor.
IFS develop solutions to help customers with their digital transformation, please contact me if you like to discuss how we can help.